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Subject: Review of Phillips (Lyle)

Subject: Re: Review of Phillips (HUCK )

Date: Fri, 11 Mar 1994 15:10:42 -0600
From: "Lyle, Chester G." 
Subject: Review of Phillips (Lyle)

Review of Kevin Phillips,

Reviewed by:  Chet Lyle
Illinois State University    3/10/94

     The rich got richer and the poor got poorer.  This
accusation has been leveled against the Reagan era many times,
but Kevin Phillips presents this thesis in a unique manner.  In
addition to drawing upon extensive statistical evidence to back
up his claims, he takes a historical perspective as he draws
comparisons between the Reagan administrations and two earlier
periods of conservative government in the United States, the
Post-Civil War Gilded Age and the Roaring Twenties.

     There are twenty-eight to thirty-six-year cycles that occur
with regard to economic policies, Phillips claims.  With each
cycle comes a new perspective with new ideas about economic
distribution. During cycles of conservative government, there
are typically trends towards the redistribution of wealth
towards the top of the social ladder, while liberal periods
tend to send wealth in the other direction.  To this degree, the
Reagan era was nothing new.  It was the culmination of the trend
of that time toward redistribution of wealth upwards.  While the
rich prospered, the poor suffered.

     Prior eras of Republican government such as the Gilded Age
and the Roaring Twenties produced similar results.  Phillips
shows how the policies of the Reagan administrations were quite
similar to those of the previous Republican eras.  In all three
periods there were drastic cuts in income tax rates,
restructuring of the economic and corporate systems, and high
real interest rates. The two previous eras were filled with
questions about the possibility of the United States developing
a large debt, which were finally realized during the 1980's.
The deregulation that occurred during the Reagan era is
comparable to the relaxation of antitrust laws during the
1920's.  Finally, Phillips claims, the governmental policies of
all three eras culminated in crashes (or mini-crashes) in the
stock market, although to call the 1989 drop in the DOW a crash
is quite an overstatement.

     Surprisingly, these unique approaches to an old thesis
grow tiresome.  The reader begins to wonder about the relevance
of prior administrations to what occurred during the 1980's.  If
the similarities that Phillips draws between the three eras are
true, then the statistics that he cites concerning the Reagan
era should not be surprising.  What is interesting about
Phillips is that he brings to light several paradoxes concerning
the Republican Party, as well as the general failure of the
Democratic Party to capitalize on them.

     Phillips discusses four major policy characteristics of the
Reagan years that contributed to the decline of middle income
wealth.  The first and most important of these is the reduction
of upper-income tax rates.  The top rate was reduced from 70
percent to 28 percent in seven years, which affected only the
top one to five percent of the nation's population (p. 76).
Along with these came redistribution of federal spending, away
from human resources (federal social services, subsidized
housing, education, welfare, etc.), and towards national
defense.  Of course, large corporations (especially defense
contractors) gained through these policies, but the poor
suffered considerably.

     The deregulation of business led to an even greater
difference between rich and poor.  Laissez-faire capitalism had
reached its highest point since the Gilded Age.  With this new
competition came a form of Social Darwinism that hurt the poor
even more, while corporations thrived.  There were also
increases in real interest rates, which were profitable to
bondholders.  The rates on federal long-term Treasury bonds rose
to eight percent in 1983, while the top tax rate applicable to
this income decreased steadily.  In fact, 80 percent of federal
spending on interest went to the top 20 percent of the
population (p. 90).

     The policies of the Republican administrations during the
Eighties had a perverse affect on those things on which their
campaigns focused.  Republican campaigns during the Eighties
focused on patriotism, concern for oppressed minorities, and
family values.  The electorate supported the positions of the
Republicans on each of these topics, but it is ironic that the
Republican position on each of these issues only contributed to
the increase in the disparity of incomes during the Eighties.

     Phillips shows that during the Reagan administrations
spending on defense skyrocketed, and eventually surpassed
spending for human resources.  Because the Cold War was still in
its heyday, the Republicans were able to get away with this by
playing a game of "Who's more patriotic?" with the Democrats.
Decreases in human services spending, of course, affected the
lower classes of society.

     The professed concern of the Republicans for oppressed
minorities shows an even greater irony when it is compared with
policy.  By the end of the 1980's the difference between the
incomes of the average black family and the average white family
was larger than it had been since the 1960's (p. 207).  Like
others who were already well-off, however, black members of the
upper class and the upper-middle class profited from the
policies of the Eighties, as the difference between upper-class
blacks and lower-class blacks was greater than any other time on
record (p. 207).

     The Republican pet cause in 1992 was family values.
Although it had not been mentioned as explicitly in the
Eighties as it was during the 1992 campaign, the Ozzie and
Harriet lifestyle has been the epitome of Republican ideals for
generations.  What is ironic is the contribution of federal
economic policies during the Eighties to the decline in the
values that the Republican Party holds so dear.  As middle-class
income decreased, there were greater economic tensions in
middle-class households.  Parents who had previously stayed at
home to take care of their children were forced to take second
or even third jobs just to make ends meet.

     One small point on which I take issue with Phillips:  He
claims that "Middle and Upper Americans were THE power bloc of
the 1980's" (p. 24), citing the fact that during the 1984
election the top 20 percent of the American population comprised
30 percent of the electorate, and that the top 40 percent of the
population made up over 50 percent of the electorate, "with a
disproportionately Republican effect" (p. 25).  There are a few
points that need to be stressed here.  It would be expected that
upper-income citizens would be more likely to vote than lower-
income citizens anyway, as the poor are generally more
apathetic towards government.  In addition, the disparity
between 20 percent of the population as opposed to 30 percent of
the electorate is not that large of a difference, especially
when we take into account the fact that the election of 1984 was
the largest landslide in the history of presidential elections.
Apparently, a significant number of poor and working class
citizens voted for Reagan in 1984 (giving rise to the phrase
"Reagan Democrats"), or else there would not have been such a
lopsided Republican victory.  Phillips' claim that the upper-
and upper-middle classes were Reagan's "electoral foot soldiers"
is quite exaggerated.

     So how would Republicans respond to Phillips' charges?  In
his March 10 column, George Will offers some alternative
explanations of the greater disparity in incomes that Democrats
have so often used to label the Eighties as the "decade of
greed."  George Will, along with Rush Limbaugh (I shudder to
mention those two names in the same sentence), claims that the
Eighties were in fact a decade of enormous prosperity.  There
were "93 consecutive months of growth, 19 million more jobs,
surging exports, declining inflation and interest rates" (Will).
Limbaugh says that "Because they can't make their case against
supply-side economics with empirical evidence, the liberals have
reduced themselves to characterizing the eighties as the decade
of greed" (p. 67), and Will agrees: "So statistical criticism of
Reagan's years yielded to moral disdain for the 'decade of
greed.'"  This characterization of the Eighties comes after the
failure of the Clinton campaign to make its case for "reversing
Reaganism" based on statistical evidence.  The statistics that
Phillips presents are indeed sometimes misleading.  His chart,
for example, that shows average family income for each ten
percentile of the population from 1977 to 1988 shows only the
NET CHANGE (p. 17).  There is no indication of to what extent
this disparity took its foothold in the late Seventies.  Will
argues that this difference did indeed begin to manifest itself
in the Seventies, and the subsequent increase in the disparity
between high and low incomes "was mostly an effect of education
differentials in an increasingly knowledge-based society."
Education is a function of income, but at the same time, income
is a function of education.

     To what extent were Republicans responsible for the
consequences of the Eighties?  Phillips complains that the
Eighties also brought about a greater disparity in the incomes
of the young and the elderly.  The young, he says, comprised a
greater proportion of people living in poverty than they had
since the Sixties, and poverty rates among the elderly even
dropped below those of the young, due to the rising value of the
elderly's real estate and increased social security payments
(pp. 206-207).  Dionne, however, claims that the decrease in
poverty among the elderly goes all the way back to the Great
Society programs of the 1960's: "The biggest increases in
spending in that period were for social security and the
Medicare/Medicaid health programs.  The increases in social
security did just what they were supposed to do: They virtually
wiped out poverty among the elderly...[I]f any programs 'threw'
huge sums of money at problems, it was these, and they are
popular enough that few conservatives would abolish them" (pp.

     Even during the Eighties, Democrats did not just sit on the
sidelines as Reagan played a game of "let's make the poor even
poorer."  First we must remember that President Reagan had to
work with a Democratic House of Representatives in order to
enable his policies.  There were no policy decisions implemented
that did not meet the approval of this House.  In addition, the
"wheeler-dealer" attitude that was so prominent during the
1980's applied to both parties, lest we forget that four of the
five Senators involved in the Keating savings and loan scandal
were Democrats.


Dionne, E.J.  WHY AMERICANS HATE POLITICS.  Touchstone:  New
     York, 1991.

Limbaugh, Rush.  THE WAY THINGS OUGHT TO BE.  Pocket Books:  New
     York, 1992.

     New York, 1990.

Will, George.  "Whitewater: It's a Threat to Politics of Moral
     Posturing."  THE PANTAGRAPH (Bloomington, IL).   March 10,
     1994.  p. A11.

Date: Tue, 22 Mar 1994 09:23:52 -0600
From: Robert Huck
Subject: Re: Review of Phillips (HUCK )

Good review, however I have one small complaint.  You said that "Reagan
had to work with a Democratic House of Representatives to enable his
policies."  On the surface this is true, but you are forgetting
something.  The GOP had control of the Senate from 1981 to 1987 (all but
two years of the Reagan era).  With the GOP Senate in hand, all Reagan
had to do was make an alliance with Southern White Democrats (whose
loyalty to the Democratic Party is dubious at best).  Although the
Democrats had de jure control of the House, the Republicans had de facto
control.  If you are going to complain about the growing poverty in the
1980's, please remember that because of fairweather Southern White
Democrats, Reagan got pretty much what he wanted.  Don't blame the REAL
Democrats for Reagan's trickle-down, voodoo economics.

Robert Huck |rohuck@rs6000.cmp.ilstu.edu
314 Walker Hall |
Normal, IL  61761-2993 |
(309) 436-9887 |